Consumers will be required to take advice on virtually every change to their mortgage if it falls un...
Consumers will be required to take advice on virtually every change to their mortgage if it falls under current European Commission proposals.
The Council of Mortgage Lenders has warned the EC's Consumer Credit Directive (CCD) will require some homeowners to take financial advice every time they consider making even a minor change to their policy, unless the UK government successfully lobbies to remove all mortgages from the CCD.
This is because the definition European officials have given some products label certain housing loans and mortgages as consumer credit, whereas most UK consumers do not see mortgages as consumer credit.
If some mortgages fall under the CCD, it could come at a significant cost to consumers, because the cost of advice would need to be included each time, says a spokeswoman for the CML.
Flexible mortgages, which have become a popular choice of loan for consumers, are included in proposals, rather than part of the European Code of Conduct which most mortgage providers and products will fall under from 2004.
"It's 'Nanny knows best' taken to an extreme and does not suggest much confidence in consumers, so it is up to the UK government's job to get secured loans removed from the Consumer Credit Directive," adds the spokeswoman.
Comments about the CCD are on the back of news earlier this week from Ruth Kelly MP, Financial Secretary to the Treasury, which confirm the UK's new mortgage regulatory regime will be implemented by October 2004.
There is a current requirement for mortgage providers to sign up to the European Code of Conduct when dealing with housing loans, however, the UK said it would exempt itself until 2004 while mortgage regulations are being implemented.
Plans to apply financial advice on all aspects of mortgage purchase also come at a time when the Treasury is trying to remove the financial advice from many financial products, such as Ron Sandler's proposed suite stakeholder products, in the hope more consumers will buy into savings products.
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